Correlation Between Isramco Negev and Opko Health

Can any of the company-specific risk be diversified away by investing in both Isramco Negev and Opko Health at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Isramco Negev and Opko Health into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Isramco Negev 2 and Opko Health, you can compare the effects of market volatilities on Isramco Negev and Opko Health and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Isramco Negev with a short position of Opko Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Isramco Negev and Opko Health.

Diversification Opportunities for Isramco Negev and Opko Health

-0.14

Correlation Coefficient

Isramco Negev  Opko Health

Good diversification

The 3 months correlation between Isramco and Opko is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Isramco Negev 2 and Opko Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Opko Health and Isramco Negev is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Isramco Negev 2 are associated (or correlated) with Opko Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Opko Health has no effect on the direction of Isramco Negev i.e., Isramco Negev and Opko Health go up and down completely randomly.

Pair Corralation between Isramco Negev and Opko Health

Assuming the 90 days trading horizon Isramco Negev 2 is expected to generate 0.45 times more return on investment than Opko Health. However, Isramco Negev 2 is 2.21 times less risky than Opko Health. It trades about 0.18 of its potential returns per unit of risk. Opko Health is currently generating about 0.07 per unit of risk. If you would invest  14,726  in Isramco Negev 2 on September 30, 2024 and sell it today you would earn a total of  4,244  from holding Isramco Negev 2 or generate 28.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.97%
Values	Daily Returns

Isramco Negev 2  vs.  Opko Health

Isramco Negev 2

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Isramco Negev 2 are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Isramco Negev sustained solid returns over the last few months and may actually be approaching a breakup point.

Opko Health

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Opko Health are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward-looking signals, Opko Health is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Isramco Negev and Opko Health

The main advantage of trading using opposite Isramco Negev and Opko Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Isramco Negev position performs unexpectedly, Opko Health can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Opko Health will offset losses from the drop in Opko Health's long position.

The idea behind Isramco Negev 2 and Opko Health pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Insider Screener module to find insiders across different sectors to evaluate their impact on performance.